Music

Apple's Music Streaming Service Smaller Than Anticipated

Now to another topic in tech. Today, Apple's Worldwide Developers Conference launched in San Francisco. The company made a slew of announcements: new MacBooks, a new operating system, and the most anticipated announcement - Apple's entry into the streaming music market with iTunes Radio. But as NPR's Laura Sydell reports, many analysts are underwhelmed.

LAURA SYDELL, BYLINE: The hype around Apple getting into the Internet radio biz was so intense that it sent rival Pandora's stock plunging. But when Apple's Eddy Cue finally made the announcement at today's conference, it took less than four minutes of a two-hour event.

EDDY CUE: Today, we're introducing an amazing way to discover new music, and we call it iTunes Radio.

(APPLAUSE)

SYDELL: Cue showed off features that will be familiar to anyone who listens to the variety of music streaming services already on the market. It lets you create your own stations based on an artist or song you like, kind of like Pandora.

CUE: And the great thing is I can always modify the station. I can just tap the star, and I can say play more songs like this or never play this song or add it to my wish list. Now, I like this, so let's play some more songs like this.

SYDELL: Of course, the Apple advantage is that the new service makes it really easy to tap a button and buy a track from the iTunes store. Its success had everyone thinking Apple was going to upend the music business again. iTunes is the number one music retailer, and it moved the industry from fighting non-paying customers who downloaded songs to making money from selling song files.

But James McQuivey, an analyst with Forrester Research, thinks the big labels are not grateful to Apple for making it easier for people to buy individual tracks.

JAMES MCQUIVEY: It forced them to make changes they didn't want to make. The music industry didn't want to change its model. The model they had was very, very comfortable for them.

SYDELL: The model they had was the CD and the album. McQuivey thinks Apple may actually be paying more than other services - like Pandora, Spotify or Slacker Radio - to stream music.

MCQUIVEY: The music labels don't only want Apple to pay for this new product, they want Apple to pay almost as it were a pound of flesh for the last 10 years.

SYDELL: Apple follows Google into the streaming music market, though Apple's service is ad supported and Google charges 10 bucks a month. McQuivey thinks Apple had to get into the streaming music business whether it's profitable or not. He says music isn't a product. It's part of a service.

MCQUIVEY: And in those music services, you see the future of music, which is people use music to sell other things. They use music to get people's attention for other things. That's why credit card companies sponsor Beyonce.

SYDELL: McQuivey says it's not about the music anymore. But so many people are passionate about music that more streaming music services just keep popping up. But so far, none of them are making investors very happy.

(SOUNDBITE OF SONG, "RUN THE WORLD")

BEYONCE: (Singing) Girls, we run this mother...

SYDELL: Laura Sydell, NPR news, San Francisco.

(SOUNDBITE OF SONG, "RUN THE WORLD")

BEYONCE: (Singing) Who run the world? Girls. Who run the world? Girls. Who run the world? Girls. Transcript provided by NPR, Copyright NPR.